PulteGroup Earnings Beat Estimates on Higher Home Sales

April 25 (Bloomberg) -- PulteGroup Inc., the largest U.S.
homebuilder by revenue, reported first-quarter earnings that
beat analyst estimates as an accelerating housing recovery
fueled sales and led to higher prices.

Net income was $81.8 million, or 21 cents a share, compared
with a loss of $11.7 million, or 3 cents, a year earlier, the
Bloomfield Hills, Michigan-based company said today in a
statement. The average estimate of 19 analysts was for profit of
15 cents a share, according to data compiled by Bloomberg.

Demand for new houses has jumped as buyers seeking to take
advantage of low mortgage rates face a tight supply of existing
homes on the market. U.S. new-home sales climbed to an annual
pace of 417,000 in March, capping the strongest quarter since
2008, the Commerce Department reported this week. Barclays Plc
two days ago raised its rating on PulteGroup and four other
homebuilders in a report headlined “Fast and Furious.”

“We now see things coming together much more suddenly,”
wrote Stephen Kim, a Barclays analyst in New York. “We forecast
new-home prices to be up 10 percent and 8 percent in 2013 and
2014, respectively, up nearly 30 percent in three years.”

Better Returns

PulteGroup is increasing prices faster than the rising
costs of land, lumber and labor by deliberately limiting the
supply offered to consumers and focusing on more expensive
houses for move-up buyers, Chief Executive Officer Richard Dugas
Jr. said today.

“Volume is not the focus for the company,” Dugas said on
a conference call with investors. “It’s driving better
returns.”

PulteGroup’s total revenue rose to $1.16 billion from $881
million a year earlier. The company sold 3,833 homes for an
average price of $287,000, compared with 3,117 homes for an
average $261,000 a year ago. Backlog, an indication of future
revenue, jumped to $2.41 billion from $1.59 billion.

Orders climbed 4 percent to 5,200 homes, with 14 percent
fewer communities. That trailed growth reported by other
homebuilders, said Adam Rudiger, an analyst with Wells Fargo &
Co. in Boston. Adjusted gross margin on home sales increased 4.2
percentage points from a year earlier to 22.9 percent.

“Although order growth underperformed peers’ and missed
consensus expectations, this shortfall was offset by strong
improvement in gross margin,” Rudiger, who rates PulteGroup
“market weight,” wrote in a note today.

PulteGroup climbed 5.6 percent to $20.79. The stock is up
14.5 percent this year, compared with a 14 percent gain for the
11-member Standard & Poor’s Supercomposite Homebuilding Index.